Nobody expects to be laid off, but every day there is someone in the workforce who loses their job unexpectedly. The good news is, we can all take steps to prevent or prepare for the worst, so that if bad news comes our way, we can soften the blow and land safely on our feet.
We’re not here to hype up some kind of doomsday scenario, but the fact of the matter is that layoffs can happen at any time, to any person, for any number of reasons. The scary part is that a lot of those reasons are outside of our control.
So, in this episode we’re talking about how you can proactively identify and plan for a potential layoff scenario so that you and your family are prepared to weather the storm emotionally and financially.
You’ll learn about:
- What warning signs you should be on the lookout for
- What steps you can take to try to avoid getting laid off altogether
- Three areas of life that you should always have a handle on
- What you can do on the side to prepare for the worst case scenario
References and Resources:
Transcription of This Episode
Welcome to the Red Pill Retirement Podcast, where we give you the raw unfiltered truth about retirement planning in the modern age. Pensions and 401K’s are quickly becoming a thing of the past, so we’re here to share resources and recommendations that will help you create the retirement lifestyle you’ve always dreamed of. If you’re ready to take control of your financial future, we’re here to help. Let’s get started.
In this episode of the Red Pill Retirement Podcast, Ian and I discuss how to predict and plan for a worst case scenario, getting laid off from your job. We’re not here to hype up some kind of Doomsday scenario, but the fact of the matter is that layoffs can happen at any time to any person for any number of reasons. And the scary part is that a lot of those reasons are outside of our control. So, today we’re talking about how you can proactively identify and plan for a potential layoff, so that you and your family are prepared to weather the storm both emotionally and financially.
This episode is full of actionable advice, so I’d recommend that you get something to write with, because you’re going to want to take notes. As always, I’ll be back on the other side of the conversation to tie up any loose ends. So, without further ado, let’s dive into my conversation with Ian.
Hey everyone, welcome back to the show. My name is James Sauers, and I’m joined once again by Mr. Ian Bond. Ian, it looks beautiful int background there today, how are things going on your end?
Bright and sunny here in the middle east James, great to see it looks the same right behind you. The wall’s the same color.
Yeah, well that’s the home office for you. I mean the weather is not as nice here in Cleveland, although today I think it’s in the seventies or eighties, because [inaudible 00:01:43] for this time of year so far. So we’re getting outside and enjoying it as much as we can. Unfortunately, the topic we’re talking about today isn’t all that enjoyable, but we are going to take a little bit of a nuances spin to it, to make it a positive experience for the folks listening at home. So, we’re going to talk about a very unpleasant experience in getting laid off, and how you can predict that, how you can look for some warning signs, and how you can more importantly have a plan so you’re prepared in the event of a layoff to continue to generate income and support yourself and possibly your family if you have one indefinitely.
So, we’re going to talk about that today. Maybe the best place to start is I think everybody has a story of someone in their personal network, whether it’s a family member or a friend, who got laid off unexpectedly and didn’t have a plan. And they suffered through it for a few months. So, I’m guessing you have a similar story, do you have something that you wanted to share with us today to kind of illustrate the point?
Yeah, I think that these things fall into a couple of buckets, right? One is the totally unforeseen circumstance where maybe there’s a turn in the economy and there’s a downsizing, something happens in your management chain. We’re talking now about employees as opposed to career professionals. And then the other one is the black swan event, which is kind of a financial crisis.
I’ve got a good friend for example that had a blowout with his boss in the mid 2000’s, and didn’t like ethically and morally the way things were being handled. And he was told to stay home. Living in New York City, in less than a year he’d pretty much exhausted the pile of savings that he had, the liquid savings. He didn’t go in and liquidate things. He was lucky, because the markets were quite good back then, this was 2005, markets were quite good, he was able to get employed fairly quickly, call it 10 months. And averted having to sell real estate at a bargain and things like that.
But I think that that’s now … a situation like that, where a career professional in their maybe late forties at that time can find a job, I think you’ve got to plan for a year to a year and a half. And you better have your finances screwed down. So, that would be the one that’s away from the cataclysmic financial crisis. I know of people going back to the dot com crisis that got laid off, or industries changed. And we all know people in the financial crisis that had problems.
Now, we’re looking at an economy that’s been expanding since March of 2009, so nine and a half years. I don’t think there are any credible strategists or economists on Wall Street that thinks that there’s going to be a recession in 2019. But when is optimism going to peak and rollover, and when will people scale back? Or could you go through a merger and see the consequences of a merger and have a downsizing?
You have a lot of reasons to be cautious all the time, and I don’t want to be a doomsayer, and I’m not a doomsayer, but we are getting pretty late in the economic expansion.
Yeah, and you know, I think that there are a couple of important points that I want to hammer home. One is the more skilled you are, the more experienced you are, the more seasoned you are, and the higher up you are inside of an organization, the harder it is once you get laid off to find a similar position somewhere else, right? Like the number of positions available are few and far between compared to when you were just a mid-level manager or something like that.
So, if you’re someone listening at home and you’re in that position, you should be especially concerned about a layoff, because it’s going to take you that year, year and a half to find a comparable position, or you’re going to have to settle for less, which is never where you want to be. The other things that came to mind while you were talking there is a lot of people think that when you get laid off or fired, that’s a performance issue, or something like you illustrated where it’s a conflict of opinion. But that’s not always case, there are many reasons outside of your control that you can get laid off and suddenly find yourself looking for a job unexpectedly, and there’s nothing you can do about it. Market forces, acquisitions and mergers. Those things can all result in layoff, and you might not even see it coming.
So that’s kind of why we’re even having this conversation today, because, again, not to be a doomsayer, but the fact of the matter is, this can happen to anybody the any time, and you might not necessarily know that it’s right around the corner.
I think you’re spot on. In fact, the number of people that don’t have a gap on their resume now that have been in the game for 20 or 25 years or more, I mean they are few and far between. And there’s a story, usually it’s a merger, or the financial crisis. Everyone understands that there was no one in control, there were financial institutions, industrial institutions that no longer exist, or are much skinner today than they were then.
So, I think you’re right. And you have to be prepared for it. And there are things you can do, whether you have a view that it’s something that could happen quickly, or if you want to think about it longer term.
Yeah, and I think this sets us up for the transition here, because you mentioned the last recession and how a lot of people are still wearing the scars from getting laid off or getting fired, or getting downsized during that period because of those rough economic times. And those same people are sitting there and saying, “I never want to go through this again. I never want to be caught unaware, I never want to be unprepared.” So, they are taking steps to have kind of a safety net, and they’re doing that a lot of times through entrepreneurship.
And I know that you have some folks in your community that are doing that. We’re going to get into some specific examples, but maybe where we should start before we do that is what are some of the warning signs? What are some of the red flags that people should be looking for if they’re in a traditional employment setting to know that hey, there is maybe some fluctuation going on, there is some volatility going on, and I could be subject to that. I’m not sure if I am, but I need to start thinking about this now?
Sure. I think what we mentioned earlier is that, look, from just a macro point of view, you’ve got a very optimistic economy right now. And by the way, the rest of the world is not that optimistic right now. So, is the United States economy going to pull up the rest of the globe, or is the United States going to revert to where the rest of the globe is? Because the rest of the globe isn’t that buoyant. That’s one.
Secondly, everyone has got their own idiosyncratic issues with regards to the industry they’re in. If their industry is subject to all of the changes that we’ve talked about, and I’ll say it again, there’s been more change in terms of technology in the past decade than there has been in the prior 10 decades, that’s what the technologists are saying. If you’re in an industry where there’s that kind of change going on, you better have your ears and eyes open.
And then thirdly, internally, whenever there’s a change in leadership, if your division is underperforming, if your boss is in a tight situation with his boss, if the CEO gets swapped out for a new CEO. It’s domino’s man. Again, if it’s you, you know it. You know who you are. If you’re listening to this and you’re in a car or at the gym or something, you know who you are. But those are the bigger picture things that I think you have to be aware of.
Yeah, so some of the things I heard in there are emerging technologies that might replace things that were previously done by people, or teams of people. Consolidation, any kind of volatility in personal relationships above you, in the work chart. Those things are all red flags that you can look for and be observant of. And I think that’s maybe the real learning point here, is to be observant of the environment around you. I mean a lot of times it’s very easy when you’re an employee to get stuck in the day to day activities of your role. But look around you, take a minute to listen to what other people are saying and explore where people around you in the work chart are, and what conversations they’re having, and what kind of office politics are taking place. Because we hate to get involved with it, because they exist, and those things have secondary and tertiary implications that can result in your position being …
I saw an internet meme today that said that there’s never been a worse time to be a knowledge worker, and there’s never been a worse time to be a factory worker. So that covers a lot of people.
Yeah, I know. I mean I guess you want to be somewhere in the middle is what they’re suggesting. So, you know, I think that we gave folks some ammunition there to know when something’s on the horizon. Maybe next we can talk about, okay, I see something that concerns me, and I don’t really have a plan in place now. So, let’s say maybe two situations. I see signs that indicate that I’m faced with a layoff short term, in the next few weeks to few months. Six month outlook, or something like that. And then the other situation would be long term, like hey, I see things that make me uneasy, maybe they’re talking merger and acquisition with another company, and I think that within the next 12 years, if that happens, I could get laid off.
So, what do those two scenarios look like for someone …
It’s 12 years, if that happens, I could get laid off. So what do those two scenarios look like for somebody who is trying to prepare for the undesirable outcome of being laid off?
I think, let me just say that I see a lot of stuff in kind of the personal finance world that says that you need to have three months of savings in order to tide you over, and I think that woefully underestimates what you need to have. I think you need to have a year plus, and I think you need to have a disaster plan where you could lower your overhead and stretch that year into even more.
If you think something is going to happen in the next 90 days, I don’t think I can help you. I mean, I give up. Stockpile cash, go slow on repaying any major debts. Certainly if you have a chance to get liquid on something, do it. If it’s that quick, there’s not a whole lot you can do. If it’s 90 days, even six months for that matter.
If it’s kind of, the talk, kind of longer term, over a year, maybe a couple years, you’re more worried about a macro event like the economy or a financial crisis, or there’s an ongoing shift in your industry, I think there are several things you can do there. We have a concept of most valuable employee. The whole concept of being the most valuable employee, there are just a ton of things you can do there. Network within your company, within different divisions. Be the one that crosses across your institution and is known to be somebody that’s easy to deal with. That helps your credibility inside your division and your currency with your boss.
Do things and be a thought leader outside your firm. Partner up with somebody. Look, the whole world is crazy about going digital. Find somebody in kind of the technology space that affects your firm and be a thought leader. Write something. Be known for it. Go to conferences. Be the person that represents that kind of initiative at your firm. Get on these key committees. I think that there’s wonderful opportunities to raise your profile outside your firm by being involved in charities. Write a book. Contribute to articles. These are all things that kind of pay off longer term and will either help you keep the job or help you get the next job. But they take time. These are seeds that have to be planted and you’ll have to cultivate them. But I think it’s something that will bear fruit, without question.
It’s very, very difficult and I’ve been in the position during the financial crisis where I was kind of one of the last people standing because we had to, every quarter, reduce our head count in a division of 3000. You do that by basically going after the highest priced people. If you’ve got a mandate from the C-suite, you go after the highest-priced people because that’s how you get to the numbers that the finance guys tell you, you got to get to. It’s really tough to let the people go that are thought leaders, that are very public, that navigate within the firm well and have a lot of support in a lot of divisions, all of the things I mentioned.
I think a lot of that is just good, general advice about professional development. It sounds like make yourself indispensable. Continue to learn and develop skills in emerging areas so that if the environment shifts, you have the knowledge and skills to adapt to that and you’re still a valuable member of the team. Because a lot of times some of that networking and just relationship building can result in somebody knowing that your position is being cut, but finding a landing place for you somewhere else inside of the organization-
Or making a referral to another company or something like that. That’s just good business practice. Maybe the advice that we’re giving today is be intentional and disciplined about doing that now and consistently over time, so that if the time comes for you to have some kind of change in your career, you already have sown those seeds and they are growing, and you have a personal brand, and you’re an authority in some space, and everybody kind of wants to hire you. You say, all right, sucks for that company over there to let them go, I want him with me.
Couldn’t agree more. You nailed it squarely on the head. I just want to loop back to what we said at the beginning which, generally, it’s not your fault. The only antidote for that is to have the disaster plan. That’s to have the cash in the bank, liquid, a potentially alternative place that you can wait out the storm and hope that it’s only going to be a temporary kind of period of time for you to get onto someplace else.
If we do go through another financial crisis and it takes more than a year, it could take up to two years, you need to really think about what you might have to do to reinvent yourself. It may be that your industry is going to be reconstituted as something entirely different than what it is today. That’s what happened to a lot of industries during the financial crisis. That’s where I think finding a low-cost place to live, doing alternative education, finding something almost completely different. We have people in our community that are building kind of side incomes in order to cushion the blow, so they don’t go from 100 cents of income to zero cents of income.
Yeah, that’s where I want to go to next, but before we get into that, what I’d also like to circle back on and go a little deeper on is the expenses side of things. You mentioned that some folks recommend three months of living expenses and that sounds ridiculously low to me. I’ve always heard six to nine months, and that’s at your current living expenses, so your quality of life doesn’t change, and if you cut expenses somewhere, you could extend that to 12 months or longer. Before we hopped on the call recording here, you did mention a couple of areas that make it a little tougher to increase expenses, like marriage and having a family. Did you want to talk about those items here?
Well, we were chatting, if you recall, about people who avoided this and they fall into three buckets. One is no job jiggle. I have a good friend that was at Lehman Brothers and a week later he was at Credit Suisse when Lehman Brothers folded. He never married so he never got divorced and he has no children. Divorces and children cost money which I’m a family man so I’m a big believer in family, but they cost money. The third thing, he had been healthy, thank goodness.
I mentioned we have a family member that has significant healthcare expenses and about to incur more, and because of the job has got incredible insurance and won’t come out of pocket for almost next to nothing, which is just an amazing thing to me. So I think those three things. If you’re lucky enough to have avoided a job jiggle, if you have got a good, solid marriage and you’ve got your kids’ education funded, that’s wonderful.
The one that you have to worry about is health and that’s a wild card for everyone, so make sure you have adequate health insurance for yourself. Those are the three big things if you can avoid them. But a lot of times those aren’t things you can avoid. What you can, obviously, do, the two big expenses are your housing expense and the second biggest is transportation, and that’s away from your tax bill. Those are the things you can work on, but you have to attack expenses as brutally as you can, as ruthlessly as you can.
I like the, the reason I wanted to circle back on those three pillars is because I think they illustrate a lot of the concepts that we’ve already talked about. For example, in the story that you shared, I’m willing to bet that new position, that one week job jiggle, the limited time frame on that is because there was a relationship that already existed that he leveraged to get the new position.
Spot on, spot on. Let me be clear. He left Lehman Brothers, called me the day of the crisis, called me from the office. Later the phone didn’t work. Called me when he went and got a personal BlackBerry, got picked up at Credit Suisse because his biggest client was not a client of theirs, he was on the institutional desk.
Now, I used to have brunch with this guy every Saturday, just about every Saturday, and he was on the institutional equity trading desk, and we always joked that he was going to be replaced by an F9 key, because everything’s going electronic. So all you’d have to do is hit the F9 key, you wouldn’t phone in an order to anybody, okay. He ultimately was replaced like all aging institutional equity sales guys are by a younger guy. Younger guys are cheaper.
His big client ended up going to jail and it didn’t take him two years after his biggest client went to jail that he was happily retired. And I say happily because he had eight figures in the bank. Never having had, had lived well within his means and never had a job jiggle, was unmarried and was fortunate to be healthy. Your right, he had relationship with a phenomenal client that got him in the door to the next place.
Yeah, so that first bucket is all about relationships. The second bucket, look, we’re not telling you to not start a family.
No, no, of course not.
We’re not telling you to not get married, but what we’re saying is have a handle on, because a lot of times, those result in fixed expenses. Children are fixed expenses. Let’s face it.
They go to daycare, they have diapers and stuff when they’re young, and then when they’re older they have school and sports and everything. So they come with a certain amount of financial burden, and you just need to be prepared for that. Because that stuff, typically, that you can’t cut in a worse case scenario. You do have to take care of your family so when you’re planning out your safety net and your financial runway in the event of a layoff, you have to consider those things and know what those costs are. Then finally, your health. You need to take care of yourself. Again, that’s kind of a wild card.
But you need to do everything you can so that there aren’t any excuses for you to have an unforeseen health issue in combination with a layoff, because that is a catastrophe and that’s something that really nobody can prepare for. But if you are proactive about your health and you take care of yourself over the long term, it shouldn’t be much of an issue unless you just get dealt a bad hand by life and, well, what are you going to do there?
Yeah. And let me just come back on the family issue because I think, I’ve written about this. One of the biggest issues I had when I saw my finances turn was with regard-
… issues I had when I saw my finances turn was with regards to the expectations that I thought my wife and kids had about the lifestyle we were leading. I was racked with anxiety because I could see our finances going in the wrong direction. Every time I looked at my wife and kids, I could see their expectations about what our future would look like and what people in our social circle were doing. I just couldn’t make our situation come together anywhere near what I though the expectations were. I carried that around for a really long time, and it was incredibly unhealthy.
Ultimately, I had a conversation with my wife and we finally got on the same page. In a nanosecond, my wife recognized it for what it was, and it was all me. I was an idiot. I should have shared more, and we sorted it out. We worked together as a team, and now we solved for it and I carried around all of that anguish needlessly for a long time.
But you’re right. There’s not much you can do on the job front. There’s some things you can do longer term. On the health front, to a certain extent, you’re in charge of your own destiny there, but there are some wildcards there, also.
I love it that you tied it back to family, because at the end of the day if you do get laid off or you do experience a career transition that’s unexpected, your family and your friends, they’re still going to love you. You’re not a failure. They’re here to help. If you have set a quality or standard of living that’s up here, they’re willing to bring that down to make ends meet. That’s what family does. We all come in together and we’re going to make it work.
Maybe for the last few minutes of the conversation here, we’ve talked about what folks can do in the office and what folks can do at home to put themselves in a position where they don’t get laid off. To prepare and hope that that never happens and look out for the red flags in the event that it might.
What we haven’t talked about yet is what we alluded to at the very beginning of our conversation, which is there are folks inside of your community that are building their own safety net so that in the event that the worst case scenario comes up, they have revenue and income that can stabilize them through that kind of fluctuation. Let’s talk about some examples of what’s going on in the No Nest Egg Retirement community.
Okay. Ladies and gentlemen, that’s known as the red pill, okay? That’s why we’re here. We’re here to talk about this. The opportunities are just abundant right now, and there are people in the communities doing all kinds of interesting things. One of my good friends, George, who I have written about, has got a couple of things going. One is he is in a business-to-business niche, where he is essentially leveraging a skill of using technologies. In addition, he is a master salesman in addition to he’s got a coaching program he’s developing for younger salespeople. There are no training programs anymore for salespeople. So he’s got a couple of different things he’s working on.
I have other people. A young fellow that I’m counseling, coaching on who is doing eCommerce. He’s developing that. Then we have a number of people, and we’re going to release some survey results in the next … By about Thanksgiving, because we’ve done a fairly large survey on how much people are short on their retirement income needs. It’s falling into a fairly tight range between two and $4,000. I’ll have more specific numbers when we get done with the survey, but that’s not a lot of money. We’re seeing a lot of people that are very interested in developing freelancing skills and things around where they can make a bit of money, around specific things that they can do for other people. There are a number of very interesting things there, particularly in this whole new world of digital media, which is wide open. There’s a lot of very interesting things that people can do there. So that’s an exciting thing, exciting place to talk about.
Yeah. Unfortunately, we don’t have enough time today to go deeper into that, but the good news is we are going to talk about your options for establishing that side income while you’re still working your job. They come in three buckets that we talked about before. You’ve got your coaching and consulting, your freelancing, and your eCommerce, your selling products and goods online. We’re going to go deeper into each one of those in the next three episodes, and you’ll have all the details and actual content you need there. The point here is you don’t have to quit your job to start doing any of those three options, and you can start generating income now on the side so that in the event of a layoff, you land on your feet. You have some money coming in, and you can scale that side income up to a full-time thing or let it sustain you through that layoff period until you find another full-time job and take that and start working again.
The numbers I mentioned are really easy and achievable, but you’ve got to start. You have to plan for it. It’s something that takes a little bit of runway to get up to full speed. You absolutely can do it at nights and weekends. You basically can manage it. We talked about this before. You can manage your day and your schedule around this. I know some incredibly busy people that are doing this, and they’re able to do it. Now, you have to give stuff up, and that stuff is Game of Thrones and stuff like that that you would think you would have to give up, but you’re going to have to make some sacrifices to have that peace of mind. It’s absolutely worth it. It’s absolutely doable, and you make that deposit now and it pays forever.
Yep. That’s exactly what we’re going to get into. Like I said, we’re going to go deep into each one of those options. We’re going to tell you what you need to get started, some of the sacrifices you need to make, what the potential upside of each one is. So stay tuned for those if that’s something you’re interested in, but for today … Excuse me … that’s going to wrap up our time. Ian, thank you so much for all of your insights and stories. They’re always great to hear. We really appreciate it.
Thanks, James. I thought it might be a dour session. I thought it might be doom and gloom. I’m glad we came away with I think some constructive suggestions for people to think about.
Yeah. I don’t do dour well, so I try to bring the positivity and optimism. That’s just how I go through life. Hopefully the folks at home got that general sense and that it’s not doom and gloom. You just have to take ownership. Take responsibility. Be disciplined and have a plan, and you’re going to be just fine regardless of what happens.
Be alert, man. Be alert.
Yep. All right. Thank you so much, Ian. We’ll talk to you soon.
All right, folks. There you have it. That wraps up my conversation with Ian Bond, who always comes to the table with valuable knowledge and insights and usually a few good stories to go with it.
Let’s quickly recap what we talked about today. First, we talked about the warning signs that you should be on the lookout for when it comes to a potential layoff. We talked about emerging technologies that can replace what you do or make it redundant. We talked about mergers and acquisitions. They can always result in consolidation of teams and layoffs. We talked about office politics and how you should keep your ear to the ground and listen to some of the conversations that are happening around you, because they can be early indicators of change that is on the horizon.
Next, we talked about what steps you can take to try to avoid a layoff. We talked about how you can nurture relationships and establish your professional authority and your personal brand and make yourself indispensable at work by constantly gaining new knowledge and skills that gives you a leg up over the people that might be on the block to be retained or cut along with you when the time comes.
We also talked about the three buckets of life that you should always have a handle on. Ian referred to job jiggle or the potential to be laid off and be unemployed for a certain amount of time until you can find another job. We recommended that you address that by always nurturing strong relationships and a strong professional network so that in the event that that happens, you can land on your feet elsewhere inside of the organization or with another company.
We also talked about family and how you should have a handle on your marriage and your children. Frankly, those are usually fixed expenses that in the event of a layoff, you cannot avoid and you still have to pay for. So at the very least, you want to make sure you know what those fixed expenses are and plan accordingly to have a safety net and a runway in the event that you are laid off so that you can continue to take care of yourself and your family.
Finally, we talked about health and how you should be proactive about maintaining your health early on so that you don’t run into any issues in the event that you are laid off and you lose those health benefits. You want to have yourself in the best possible condition that you can so you are prepared to weather the storm in that regard.
Finally, we talked about some things that you can do on the side of your day job to make sure that you have income streams established in the event that you are laid off. Those fall into three big buckets. They are freelancing, coaching and consulting, and eCommerce. In the next few episodes, we’re going to dive deeper into each one of those and provide specific details about how you can get started, what it takes to get started, and the potential earnings and time commitment that you’re looking at to be involved in such a thing.
As always, we’ll link up to any tools or resources we discussed in the show notes. Those are available at redpilretirement.com. I hope you enjoyed our conversation. If you haven’t already, you consider subscribing to the podcast, sharing it with a friend, or leaving us a review in your favorite podcast directory. It helps us reach more people and deliver more value to folks who may not have a high level of confidence in their current retirement plan and are looking for an alternative way to either catch up or get ahead.
Until next time, best of luck in all that you do, and we’ll look forward to seeing you on the next episode of the Red Pill Retirement podcast.